Good afternoon. This is the conference call conference operator. Welcome, and thank you for joining the Interpump 2023-2025 ESG journey conference call. As a reminder, all participants are on listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Miss Elisabetta Cugnasca, Head of Investor Relations of Interpump. Please go ahead, madam.
Thank you. Good afternoon or good morning according to your time zone, and welcome to Interpump 2023-2025 ESG Journey conference call. I am Elisabetta Cugnasca, Head of Investor Relations of Interpump Group. Here with me, Mr. Giacomo Leo, ESG Executive Director and Group Legal Counsel. Mr. Fabio Marasi, you are familiar with, Board Member and Executive Director of the Group. On behalf of all of us, I thank whoever is now attending this call despite the short notice. Before leaving the stage to Mr. Leo, two additional remarks. Usually, I'm obliged to draw your attention to the disclaimer slide inserted in the next part of the presentation you have received by email. Finally, I would like to underline that the goal of this meeting is to present you our 2023-2025 ESG Journey.
Last February, we underlined to you that the group had three focuses for 2022, operation, M&A activity, and consolidation and alignment of group sustainability activities and process. Now, we are here because we work hard with a very concrete approach to deliver the latter one. Please, Mr. Leo.
Thanks, Miss Cugnasca, and thanks all of you for the attendance. I'm very pleased to meet you virtually for the first time as a joint Interpump Group end of last year. Before going into the detail of our ESG chart, I would like to develop further two concepts that Mr. Cugnasca introduced to you. What does it mean for us, this journey and the concreteness behind our journey? Last February, we underlined that the launch of a consolidation and alignment project did not mean that what we have always been doing was not sustainable. Actually, we use a quotation of Lao Tzu that we believe represent a bet the group has to make.
A falling tree makes more noise than a growing forest." To reflect the idea that the loudest events are not necessarily the most important ones, that is we associated to the growing forest the sum of all the very great gains companies of our group, which will be able to grow both in terms of sales and profitability, leveraging on two drivers. A constant and consistent innovation path, and the full integration with the local environment and community. At the end of 2021, we decided to launch this process, the first project at the group level, to lead back to unity of all the group subsidiaries' activities. To clarify, we were talking of a 2023 to 2025 journey, identifying 2023 as the starting point.
From my previous words, you can easily understand that this journey was already ongoing, and that 2023 is only the starting point from a unity point of view. Unity, which was achieved by incorporating and balancing the group's historical key success factors. The diversification by product, geographical area, and final application. The heterogeneity of the business model, both organic and M&A growth strategies, with a very well-known soft integration policy for the acquired companies, and powerful and consistent focus on operations and execution. The second concept I would like to develop and share with you is the value of concreteness, which underlie this plan. I would like to say not only the basis of this plan, but the base of the entire group strategy and its implementation.
This concreteness has led to the fact that we start from the foundation of the group. As can be seen in slide 5, the governance action framing the others. With an allegory that comes directly from our business, governance is the hydraulic system that allows to everything else to move. 20 concrete activities to be implemented to reach 20 clear goals. On slide 6, you will see for each mainstream, environmental, social, governance, what we believe are the three most important actions to achieve. A concrete time horizon, 2023 to 2025, with only one of the 20 actions which will require a little more time to be carried out. Obviously, from the environmental stream, the crucial deadlines are 2030 and 2050.
Thanks to our concrete approach, we aim for those deadlines with precise intermediate steps and checkpoints, as shown in slide 12. These checkpoints will allow us to adapt our strategies and define possible steps going forward. 2023-2024, the time frame to lay the group's ESG foundation. 2025 and 2027, the time frame to lead the journey towards achieving the 2030 and the latter, 2050 decarbonization target. Concrete results defined to implement our journey for the entire project period. From a cash flow point of view, around EUR 10 million of CapEx, of which 40% already in 2022 budget. Once again, this 40% in 2022 budget is the clear evidence of my previous point. Many activities were preexisting and ongoing. We have been already supporting the growth of our footprint.
From a P&L point of view, around EUR 3 million of incremental cost at OpEx level, while in terms of G&A, no material impacts are expected on P&L, since many activities will continue to be performed internally, with the possible support on certain areas from specialized external consultants. Concrete correlation with the top management remuneration policy. As the summary of the call, last April 2022, the annual shareholders meeting approved the 2022-2024 stock option plan, which foresees already ESG target to be achieved for the vesting, the consequent acceptability of the options. Moreover, besides a clause which allows the board to align the stock option plan to the first section of the group remuneration policy in its evolution. As you surely are aware of, first section of group remuneration policy is to be updated in 2022.
In 2023, and benefits formally anchored to the ESG journey actions. Timing is therefore perfect to ground the entire top management remuneration mechanism to such ESG parameters. Before entering into the ESG action details, please allow me to finish this introduction with some methodology explanations, which you will find in more detail on slide nine through 11 of the presentation. 2021 materiality matrix was one of the major starting points, and we applied a dynamic approach to anticipate as much as possible important changes that the recent macro and geopolitical events would most likely drive. Being an industrial business model, we started from group manufacturing subsidiaries, and focusing on factories above 1,000 square meters, we covered almost 65% of our 2021 sales, 50% of the whole production sites, and around 70% of our employees.
We consider it a representative material sample to develop our first group project. 16 subsidiaries in the Valves division and nine in the Water Jetting one. With the roster, identified group subsidiaries expression of best practice, we decide to leverage on their experience and their success through the mechanism of pilot projects. For example, from Walvoil for supply chain evaluation, Interpump for the circular economy, Muncie for gender and diversity. Due to the heterogeneity of business model inside the group, we believe this is the most effective and in the meantime, efficient way, in other words, concrete, to fertilize our forest. Focusing now on each streamline, we would like to elaborate in detail on actions which, according to us, represent the journey cornerstones, starting from G, the governance system of the entire machine.
Establishment of a board ESG committee, the formalization of a succession plan and tax compliance consolidation in line with the best tax practice. Especially for the first two actions, execution timing is perfectly aligned, considering that 2022, 2023 is the natural maturity of Interpump Group's board of directors. Splitting the current risk control and sustainability committee responsibilities, we believe that the creation of a dedicated sustainability committee will speed up our journey, considering the presence of at least one executive director and a major focus in ESG for our field. This will ensure the ESG grounding operation and will give to the ESG strategy definition process the concrete method necessary for it, for its implementation.
In terms of succession planning, the nomination committee, which will be appointed by the annual general assembly meeting in 2023, will propose certain processes and mechanisms which will be approved by the board. These actions will be a formalization of groups already operative practice, with the managerial steering committee already working and supporting the group CEO, and possible nursery to eventually fit the role. On the ESG streamline, we concentrated our effort first and in particular to the reduction of the carbon intensity and on the increase of the renewable electric energy consumption.
Considering, first, the investment projects already ongoing and to be approved, related to the installation of photovoltaic systems, which are perhaps the best evidence of the fact that the group journey already started before the formalization of these actions, thanks to the group historical concrete focus on efficiency. We would never be able to insert in slides 17, 15, and 22 pictures of our factories from India to Italy, Sant'Elpidio a Mare, Interpump, where we are talking now, or San Polo for Reggiana Riduttori, if we would have not planned and budget these photovoltaic installations some years ago. The definition of a power purchase agreement, PPA, considering that with an overall reduction of around 31% in emissions produced under Scope 1 and Scope 2, and an increase of renewable energy consumed of around 25%, obviously, the photovoltaic systems were not enough by themselves to pursue this target.
We will then leverage on a power purchase agreement, which will be covering the most relevant portion of the Italian production capacity. Keeping in mind the crucial deadlines of 2030, to remind you, means 65%, and 2050 carbon neutrality, we then consider it essential to proceed to define a decarbonization strategy encompassing the entire group perimeter, and all category of carbon dioxide emissions, Scope 1, Scope 2, and Scope 3, as a fundamental pillar to assess all the economic implications and deploy all the appropriate concrete actions to achieve these challenging objectives. Last but not least, with reference to the H&S line, group action will be focused on two of the most important group stakeholders, employees and suppliers. The ones on which group historical success is built, delivering year after year the result of excellence you are used to.
To our group employees, we have two of the three most important actions dedicated to injury rate improvement and ISO 45001 certification extension. Our short- to mid-term is to keep the 2022/2024 accident incident index below the average of 2019/2021. That is 2.2. The average does not need to be adjusted for COVID influence. It's true that in 2020, injury rate was down due to lower production. Lower production and not stoppage of the production. The massive effort to transform the backlog in 2021 turnover made the injury rate moving slightly above the average. In terms of ISO 45001, we believe that all of you are aware of the importance of these certifications that support improvement on health and safety conditions from the entire production point of view.
It is the only target which will be implemented later than 2025, 2027, to be precise. This, because we will be entering factory life. In other words, where the concrete Group life is. Within the factory, actually, that the Group strategy is executed between production lines, raw material, and third-party inventory, colleagues who move not only together, but in coordination with machines. The key driver to both these targets is another one, the increase per capita of non-compulsory training hours, up by almost 35%. We already defined the training catalog with some courses dedicated to the entire Group population, cyber security, whistleblowing, anti-corruption, and near miss, some to certain specific parts, soft skills, language, leadership. Suppliers are the other crucial stakeholders on which we focus our attention. Their importance is reflected in the focus of our evaluation model.
To be qualified as a group supplier, three are the key parameters: technical performance, timely deliveries, and moreover, flexibility. It has the capability to support and follow group flexibility. Our evaluation process will incorporate the four ESG parameters. Please have a look at them on slide 23, and be sure that our stickiness will not be relieved, and we start to work with our most important suppliers. To conclude my remarks, and before leaving the floor to your questions, please allow me to share and repeat to you the word behind our 2022/2025 journey, concreteness. We will be pleased if at the end of this conference call, and after having had the opportunity to review the material we prepared for you will agree in defining our plan like we defined it, concrete.
Concreteness is the base of our strategy, is the base of its realization at operational level, and we are convinced it has been entirely translated in our ESG journey. Thank you again for your attention.
Thank you very much, Mr. Leo. We are waiting for your questions. I am obliged to bother you again, repeating one of my forewords. This conference call aims to share with you our ESG journey, its approach, its action, its details. Thank you.
This is the operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Michele Baldelli of BNP Paribas. Please go ahead.
Hi, good afternoon to everybody. Can you hear me?
Yeah.
Perfect. Thank you. Congratulations for this year's G plan and the clear presentation. I have a question. When you speak about succession plan, you mean an overall succession plan for the various division department, or is it also at the CEO level that this means? I just wanted a clarification around it. The second question relates to the perimeter. I see that you defined a clear perimeter. I wanted just to understand if this perimeter will be kept aligned in the coming few years, or do you already plan to cover more plants by 2025? Thank you very much.
Thank you, Mr. Baldelli. Successor plan, first question. Of course, we will concentrate ourselves first on the top level, so at CEO level, and his possible successor plan. Thereafter, we plan as well to deploy the same procedure and rules also to the other companies within the group. With reference to the perimeter, of course, the baseline we started from is 2021, be it on the non-financial declarations. Of course, we concentrate our targets on such baseline. Whether, of course, it will be expanded, considering the growth strategy that we already mentioned in our presentation.
Thank you very much.
You're welcome.
The next question is from Domenico Ghilotti of Equita. Please go ahead.
Good afternoon. Two questions. First is a follow-up on the succession plan. Are you planning to separate in this ESG journey the CEO and chairman role position, or there's nothing visible at the moment? The second question, just a clarification. When you are saying EUR 3 million incremental costs, so this is these are the recurring costs that you will incur to adopt your ESG journey . Correct?
Okay. Mr. Ghilotti, thank you very much. On the successor plan, I know that it's very attractive as an argument. Honestly, it's too early to anticipate the structure of the next board of directors, which will be appointed by the general assembly meeting only in 2023. Of course, it will hopefully address all the instance that comes from the market and the best practice that we see in similar listed companies. With reference to the incremental value that we advanced to you, yes, that is correct. It is the value that we're rolling it in the entire journey of our plan.
Just to be clear, EUR 3 million. Your cost structure will be EUR 3 million higher on a recurring basis, or not the-
No, for the entire period of the plan. Of course, in the aggregate, it will be EUR 3 million.
Okay. Thanks. Thank you.
You're welcome.
As a reminder, if you wish to register for a question, please star star and one on your telephone. For any further questions, please press star and one. The next question is a follow-up from Domenico Ghilotti of Equita. Please go ahead.
Yes. You have been elaborating this plan for a while, so you are the best person to answer what is the most challenging task included in the plan. If you can give us a feeling on what is the most complex from an implementation perspective?
If I may say, I would say that the peculiarity of this group is the heterogeneous business model of all the companies within the group. Different countries. This is cross-cultural approach. We have an evidence of different best practices spread all over the group, and on the opposite, we have some other areas and countries where we see a large margin of improvement. In this sense, to transform the ESG plan and the action and to transform the cultural approach of the entire group, this is, I think the most challenging one, for sure.
In terms of targets and objectives, we have been very concrete in defining them, and we've been very concrete in challenging the group in order to achieve.
Okay. Thank you very much. Congratulations.
Thank you. Thank you very much.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one.
Okay.
Pardon me. There is one more question from Michele Baldelli of BNP Paribas. Please go ahead.
Yes, sorry. Just a quick curiosity. On the renewable energy target, do you give an idea about what is the split between internally produced and, let's say, externally? Or do you want to keep it, say, for yourself?
This is something that we would like to keep for ourselves. Of course, we can analyze this part, but this is part of our strategy to be developed. We'll keep silent on it.
Okay, perfect. Thanks very much.
You're welcome.
Okay. Thank you very much again for participating. We know that, we surprised you with a short notice, so we really appreciate the one of you that's here with us. As usual, after, at the end of this call, I am at your disposal for any kind of additional information, and obviously we will be at disposal in the next days. Thank you very much, and have a nice evening. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.